Philips, CEC team up to light the way on the road

Royal Philips Electronics NV and China Electronics Corp signed a joint venture agreement on Thursday, in a bid to grab additional market share in China's intelligent road lighting market.

The new company will be 70 percent owned by Shenzhen SED Industry Co Ltd - a listed company based in Shenzhen and part of the CEC group of companies - and 30 percent by Philips.

The joint venture will focus on intelligent controls, software and LED fixtures for road lighting. The cooperation combines Philips' innovation capabilities in the road lighting field with SED's knowledge of the local market, Philips said.

"The agreement between SED and Philips is a milestone for both parties to accelerate growth in the area of intelligent lighting for cities in China," said Liu Liehong, president of SED. "The joint venture combines the strengths of the two companies, allowing us to shape the LED transformation to energy-efficient and intelligent public lighting in China."

Patrick Kung, CEO of Philips Greater China, said that the partnership will allow the company to serve local customers with meaningful innovations.

The joint venture's offerings will include Philips CityTouch, an innovative Web-based intelligent management system for street and road lighting in cities, said Kung.

He said the system enables online, dynamic and flexible control of lighting on a citywide scale, allowing cities to use light only when and where it is needed, maximizing efficiency, while ensuring visibility and road safety. Combined with LED lighting, it delivers energy and maintenance savings of up to 70 percent, according to the company.

The Chinese government is promoting the development of more energy-efficient cities, including the upgrade to LED technology and intelligent lighting management systems.

In recent years, the country's demand for energy efficiency has created mounting sensitivity among companies regarding the costs of products.

China's energy-saving plan requires new buildings to strictly follow the requirement of saving 50 percent of energy compared with old buildings, generating massive opportunities for energy-saving lighting products, according to a research note issued by Tebon Securities Co Ltd.

According to SEMI China, an industry association, LED technology and costs are in place to phase out traditional lighting applications and products, with international leaders taking up the majority of market share.

Song Lei, a research at Rising Securities Co Ltd, said that the increasing manufacturing capacity and the decrease of the raw material prices are stimulating the demand for LED products.

Philips estimated that by 2015, the penetration of LED products will be 50 percent. The company has 30 percent of the lighting market on the Chinese mainland.

Philips' first-quarter financial report showed that the sales of its LED products increased 38 percent year-on-year, accounting for 23 percent of its lighting business sales. The company targets growth of between 8 and 10 percent this year for its lighting sector.